G8 Meeting
Stocks and bonds moved sideways today, as did the Dollar.
Gold fell again, and tested it recent lows – rebounding upward. If the pattern holds true, tomorrow will be an up day.
Oil and gasoline was where the market was today. Both fell well out of their trading range, and are heading for recent lows. Good news for us and the economy.
In the news today…..
I hope you all had a Great 4th of July, and ate your fair share of hotdogs. Remember the lives that were risked back then so you can eat hotdogs in peace. Don’t take your rights and privileges for granted. They were hard fought for. First the British, then the Germans, and then the Japanese. All of them wanted America for themselves, but it’s yours now – if you can hold onto it.
Service Sector – gained in June compared to May, but it is still shrinking. This is an index measurement, rather than real numbers, and it came in at 47, where 50 is the breakeven between growth and shrinking. May had been 44, so you see the improvement.
UBS – wants to shake up its top management in the US, rather than sell it off. Remember, that I have warned you that UBS is not trustworthy, as I have a personal history with them. As long as it’s owned by the Swiss, I recommend you do not use them as your broker in the US.
The G8 – is meeting in Italy from July 8 through July 10th. The subject of the Dollar being the Reserve Currency of the world will be brought up by the Chinese who might recommend start using the IMF Special Drawing Rights (SDR) as an alternative. Given the dismal track record of the IMF, I think this would be a disaster in the making.
If you remember a year ago, I warned that it was the US being the Reserve nation of the world that has caused all the turmoil within the US financial economy over the past century. It all started when President Roosevelt confiscated all the gold held by US citizens, and took us partially off the gold standard. The Bretton Woods Agreement during WWII solidified the US position. Then, President Nixon took us off the gold standard completely. Along came the President Carter inflation days, and many future bubbles – remember the Tech Bubble (irrational exuberance) and the Housing Bubble. Now we have a fiat currency of paper that are really just IOUs that only work on TRUST. That trust has been severely shaken last September/October during the meltdown of the world’s financial institutions.
So, I actually think we must find a new way of handling the “reserve currency of the world” by not having it be the US Dollar, but there are so much self-interest groups out there today (especially within the IMF) that I don’t like any of the proposed alternatives.
US Treasury will auction $73B – this week of notes, bonds, and TIPS. The marketable debt of the US will rise to $6.45TRILLION – a massive amount that we MUST pay interest on. No wonder the FED is trying to keep interest rates down.
Here are the last numbers for today:
Dow Jones 30 Industrial – 8325 (up 44 points)
10 Year Treasury Bond – 3.51% (up 0.01%)
Euro – $1.3989
Gold – $924 (down $7)
Oil – $64.05 (down $2.68)
Gasoline $1.74 (down $0.05)
